Outdoor Retailers

Retail woes: Outdoor shops hope supply will soon meet demand

In part two of our series on the outdoor industry’s supply chain disruptions, we look at how retailers big and small are dealing with increased demand and diminished supply—and when balance might return.

For nearly 50 years, Beaver Sports in Fairbanks, Alaska, has been the go-to place for local adventurers to outfit their hiking, biking, backpacking, and skiing explorations.

When Covid struck the state, denizens of interior Alaska descended on the store in droves—just as millions did at outdoor retailers across the country. That bump in business, plus the newfound interest in outdoor recreation, was an unexpected boon for shop owner Greg Whisenhant, whose father opened Beaver Sports in 1972.

“What better way to socially distance yourself than to get outside,” he told Outside Business Journal. “All of a sudden you have this renewed spirit of the outdoors. So many people wanted to get out and rediscover it or see areas that they’ve never seen before.”

Some of Whisenhant’s enthusiasm has turned to frustration lately, however. Like many outdoor retailers, Beaver Sports hasn’t been able to keep up with growing demand due to a host of supply chain delays. As OBJ reported earlier this week, port congestion and other shipping snags have prevented brands from delivering apparel and gear on time. Outdoor shops across the U.S. are feeling the sting.

“We’ve seen the demand go way up, but we’ve seen the supply go way down,” Whisenhant said. “The dream for any business owner is to see people coming through the doors and buying a whole lot of product. We have been selling a little bit, but we’d certainly do better if we could get more product in here.”

Beaver Sports shop sign
Beaver Sports in Fairbanks, Alaska, is one of dozens of independent retailers across the nation that have seen demand consistently outstrip supply since last year. Photo: Courtesy

The rush for consumers to get outside

Stocking and selling more items is the goal of every outdoor retailer, of course, but that was especially true once stores reopened last spring following the pandemic-driven lockdowns that had kept them shuttered for weeks.

Nate Porter, who owns Salida Mountain Sports in Salida, Colorado, with his wife, Diana, told OBJ that once they were able to reopen in May following a mandatory shutdown, business steadily picked up.

“Initially it was crickets, but very quickly it became apparent that people were looking for any way to get outdoors and distance,” he said. “We started selling whatever we could and ended up having a great year. All the enthusiasm of last summer carried over into winter with people’s desire to participate in snow sports. We’re a backcountry shop and a Nordic shop, so we had already been seeing growth trends in those markets before Covid, but Covid just turned on the turbos for those products. It was like nothing I’ve ever seen.”

Read more: How retailers are managing inventory during the pandemic

Recent developments, however, have dampened that explosive growth. Porter said the store has been experiencing “partial shipments and late deliveries,” and similar disruptions are taking a toll on independent and national stores alike.

Joe Royer, president and co-founder of the Memphis, Tennessee, shop Outdoors Inc. (recently featured in OBJ’s Shop Talk) said the company’s three doors have seen delays with “bikes, fleece, and most all categories because suppliers are playing things very conservative.”

Even the larger retailers and e-tailers are being affected. Lauren Anderson, divisional merchandise manager of hardgoods for Seattle-based retailer evo, said the company expects to see “supply chain challenges to remain through next spring.” That’s driven evo to focus on one of the few things it can control—improving the customer experience.

“The outdoor industry has a very engaged audience right now,” she told OBJ. “At evo we have focused on providing great service and experiences, inviting [people] to explore local trail networks and encouraging our employees to volunteer with local trail building projects. It is our chance to welcome a new crop of participants to share the spaces and activities we love and strengthen the stewardship required to keep these spaces accessible.”

REI, with its 168 locations across the nation, also said it doesn’t expect the shortage of apparel and gear to end anytime soon. But the co-op is coordinating with vendors to keep supply flowing as much as possible.

“We’re working hard to get our customers the gear they need to continue pursuing their outdoor passions,” an REI representative told OBJ. “We’re seeing strong customer demand for gear overall, particularly in cycling and paddling. That product is selling quickly. In some cases, we’re temporarily selling out, but we’re engaged every day with our vendor partners to rebuild our stocks. We expect this trend to continue through 2021.”

REI, with its 168 locations across the nation, also said it doesn’t expect the shortage of apparel and gear to end anytime soon. But the co-op is coordinating with vendors to keep supply flowing as much as possible.

Demand for outdoor products isn’t slowing

Supply chain congestion is complex, but the current situation can be traced to throngs of people venturing outside like never before. As brands ramped up production last year to meet the increased demand, their factories—some of which were already operating at reduced capacity due to Covid safety measures—soon encountered a shortage of raw materials. Those who could secure what they needed to assemble their goods now faced price hikes.

The problems worsened from there. With a rise in imports to the U.S., shipping lanes clogged, ports became congested, container ships were delayed at sea, and costs increased. What’s more, because so many ships have been sitting idle off the West Coast or stuck in port, there’s now a container shortage in Asia, further crimping the supply chain. Toss in the ongoing lack of truck drivers here and it’s easy to see why orders are taking so long—and why retailers are so frustrated.

“Late last year, we were out of bikes, we were out of boats,” Whisenhant said. “We were also out of the racks to carry those toys on your car. We’re now going into another year where this is still a problem. I’ve been told by some of the bike companies that even in the year 2022, they’ll still be struggling to keep up with the demand.”

Read more: How healthy are the industry’s supply chains?

Despite the issues facing outdoor shops, the national retail forecast is upbeat. According to the monthly Global Port Tracker report released by the National Retail Federation and Hackett Associates, “imports at the nation’s largest retail container ports are expected to grow dramatically during the first half of 2021 as increased vaccination and continued in-store safety measures enable additional shopping options.”

The specialty retail channel also has outperformed expectations. As OBJ reported last month, members of Grassroots Outdoor Alliance saw 2020 sales dip just .34 percent compared to 2019—a remarkably small decline considering many stores saw few to no sales when lockdowns were enacted last spring.

With a rise in imports to the U.S., shipping lanes clogged, ports became congested, container ships were delayed at sea, and costs increased. What’s more, because so many ships have been sitting idle off the West Coast or stuck in port, there’s now a container shortage in Asia.

From June 2020 through January 2021, Grassroots retailers nationwide were up 10.8 percent, bolstered by an 18 percent sales jump in the first month of the new year. Meanwhile, all shops are placing as many orders as their vendors can fill in hopes of supply eventually catching up to demand.

“What we’re hearing from brands is that advance bookings are way up and, in many cases, higher than ever for the coming year,” Gabe Meier, Grassroots’ vice president, told OBJ for this report. “But there’s also a significant ‘what if’ in play, as it’s likely that some retailers have increased their orders for the coming year to make up for the lack of product they received last year due to a highly inconsistent supply chain. That’s an uncertainty that’s worth paying attention to.”

“Made in USA” retailer considerations

Something else worth paying attention: American-made brands are now having a moment. With fewer supply chain issues to navigate, they worry less about shipments getting hung up in LA or Long Beach, though some brands do source specific components or materials overseas.

Retailers told OBJ they would love to welcome more domestic brands to their stores, but they understand that foreign manufacturers can’t uproot their production processes overnight, and even if they could, sourcing and producing stateside could be cost-prohibitive.

“That has been a consideration, and there was some talk about it, especially when tariffs came into play,” Whisenhant said. “But we’ve made stuff overseas for so many years that it’s hard to pull the plug and move everything to a new location. Still, I’ve had people come in and say they’d be willing to pay a little bit more if it was U.S.-made. How much more, I don’t know.”

Salida Mountain Sports’ Porter agreed on both counts. “The big-picture answer is, yes, I would love to buy more made in the USA,” he said. “But there are challenges, and I think that Made-in-USA vendors that delivered on time are lucky to have done so because some were waiting on one component or one material from overseas. At this point, anything made in the U.S. is going to be more expensive, and I don’t know how much consumers want to put their money where their mouth is. Consumers want the best gear for the best price, which they’ve been trained to expect for many years.”

“All kinds of things going wrong,” says one retailer

The retailers we spoke with for this report understand supply chain backups are common. They also understand they’re at the mercy of upstream partners, faraway disruptions, and additional factors generally out of their control. It’s the cost of doing business in a global economy.

Still, they are diligently working with their suppliers to keep bookings on pace and keep their shelves stocked. And they are focused on gearing up for April and May—two months that should provide favorable comps since many stores were closed this time a year ago.

In the meantime, as we outlined in the first part of this series, brands are doing what they can to facilitate faster shipments, keep their retailers supplied, and by extension keep their consumers happy. Stephan Jacob, Cotopaxi co-founder and COO, told us for this report the apparel brand is navigating the crisis through “advance booking requests, optimizing provider mix for the strongest service levels at origin, revising and expediting production plans, and choosing the lanes that avoid the most congested U.S. ports.”

Retailers are hopeful that vendor efforts like these will pay off. But they also understand they’re facing a litany of hurdles that have stacked up like containers on a slow-moving, oceangoing ship—all while consumer demand continues to surge.

“It’s not just one thing going wrong. It’s all kinds of things going wrong,” Whisenhant said. “That makes this an ongoing game of catch-up.”

Part one of this series examined the supply chain congestion from the perspective of outdoor brands.